March 30, 2017

Cutting Foreign Aid Is No Panacea

When The Concord Coalition presents its federal deficit-reduction exercise around the country, many of the participants arrive with what they consider an easy solution in mind: Cut foreign aid.

They assume this would produce a gusher of extra money for other programs or deficit reduction. As they begin studying the spending and revenue numbers in the exercise, however, many participants quickly realize that annual foreign aid amounts to far less than they had realized -- a little over 1 percent of the federal budget.

That’s about $50 billion a year. By comparison, the government’s net spending last year on Medicare was $588 billion, while $910 billion was spent on Social Security and $584 billion on defense.

Misconceptions about the size of the foreign aid budget are widely shared. Over the years studies have repeatedly found that Americans grossly overestimate what the country spends on foreign aid. Many aren’t even in the ballpark, assuming that this assistance consumes a fourth of the entire federal budget or more.

But cutting foreign aid -- or even completely eliminating it -- would be no substitute for seriously addressing the big drivers of the federal deficits that are projected for the coming years: Social Security benefits, Medicare and other health care spending, special-interest tax breaks that drain federal revenue, and rising interest costs.

This point should be kept in mind by the Trump administration, which is reported to be considering proposals for deep cuts in foreign aid as well as the U.S. State Department. These would not provide much help in addressing the nation’s big fiscal challenges, let alone pay for large new tax cuts and additional spending on defense, infrastructure and other items Trump has promised.

Nor are such substantial cuts in foreign aid and diplomatic funding likely to win congressional approval, as lawmakers in both parties have pointed out. Some argue that such cuts, if actually implemented, would weaken America abroad and could ultimately result in higher spending for military operations.

 “People seem to think foreign aid is charity. It’s not,” said Rep. Tom Cole (R-Okla.), who is on the House Budget and Appropriations committees. “It’s given largely in the interest of the United States.”

Senate Majority Leader Mitch McConnell recently told a press conference that he is not in favor of cutting foreign aid. He also said that “the diplomatic portion of the federal budget is very important” and that “you get results a lot cheaper, frequently, than you do on the defense side.”

Democrats have been even more blunt in criticizing sharp cuts in foreign aid and diplomatic efforts, using terms like “short-sighted” and “ill-considered.”

In foreign aid and the State Department budget, the administration and Congress should certainly weed out any wasteful or ineffective programs. But doing that does not relieve them of the responsibility to address the nation’s larger fiscal challenges -- and to pay for any new spending programs and tax cuts.